“Mobile is the platform of today, and now we’re also getting ready for the platforms of tomorrow,” said Facebook founder and CEO, Mark Zuckerberg. “Oculus has the chance to create the most social platform ever, and change the way we work, play and communicate.”
That’s the quote from Zuck in the March 2014 press release announcing Facebook’s $2 billion acquisition of Oculus. That’s double what it paid for Instagram two years earlier, and it took nearly a decade of sales and antitrust talk among global regulators for Facebook to finally go all in on the Metaverse and rebrand to Meta.
I don’t know if you’ve used it yet, but Oculus Quest 2 is my favorite VR headset so far. Palmer Luckey and the team did a lot of research to make the Rift, and within its first decade, Oculus struck gold with its Quest VR headsets. It’s a fun, self-contained experience and accessible to the average person. Of course, only about 16 million total VR headsets have been sold over the past decade.
So, why is Zuck pivoting one of the most successful advertising platforms in the world from social media to virtual reality?
Let’s start by understanding what a Metaverse even is.
What is a Metaverse?
The term “metaverse” was coined in the 1992 novel Snow Crash, by author Neal Stephenson. It referenced a 3D virtual world people visited using avatars. Ernest Cline’s 2011 novel Ready Player One also popularized this concept in the mainstream. However, open-world games like Activision Blizzard’s World of Warcraft already built fictional metaverses by that time.
Meta’s own definition of the Metaverse is simple:
The “metaverse” is a set of virtual spaces where you can create and explore with other people who aren’t in the same physical space as you. You’ll be able to hang out with friends, work, play, learn, shop, create and more. It’s not necessarily about spending more time online — it’s about making the time you do spend online more meaningful.
And it’s not a bad definition, as the Facebook platform does fit the bill. It’s divided into Groups and Pages and has features to connect with friends (Messenger), work (FB for Business), Play (FB Games), Learn (Blueprint), shop (Marketplace), create (Creator Studio), and more. It’s not necessarily about creating 3D-rendered virtual worlds you can only visit with a VR headset on – it’s about describing the company’s needs for more contextual data.
Why Facebook went Meta
Although Zuckerberg heavily focuses on the VR aspect in the launch video, that’s just a red herring. Remember, Oculus only sold 10 million Quest 2 headsets; that’s just a drop in the bucket compared to its biggest revenue stream, which is advertising to the 2.91 billion people on Facebook, 2 billion in WhatsApp and 1.4 billion on Instagram.
And the more return on ad spend (ROAS) the company can provide its advertisers, the more money it can charge and the more revenue per user it generates. That means it needs to know more about you than just who you are and what you’re doing online.
Meta wants to know everything about you so that it not only offers you what you want but also when and where you want it. To do that, it needs a bevy of contextual data from your smartphone (where it’s preinstalled at the OS and service provider level), web browser, and Portal and Oculus devices.
This helps it learn what you’re doing in the virtual world online in the context of what you’re doing in the real world throughout your day. You don’t just have get gas, for example – you do it habitually in a pattern that can be seen over time.
Remember Foursquare?
The company used geolocation and other data to predict your habits , and it’s nothing new. This has been happening since before the internet. Banks have long monitored your spending habits in an effort to prevent fraud (among other things) . If you buy something outside of your normal routines, the bank may automatically flag it as potential fraud and place a hold on your account.
Imagine if your bank could track your eyes and physical movements while having a camera inside your home like the Oculus has. Over a decade ago, Microsoft implemented facial recognition and eye tracking features in its Xbox Kinect device that kept data of who was in the room watching what as long as your console was turned on, whether you were playing a game or not.
For example, if you threw a Super Bowl party, Microsoft knew who came, who was rooting for which team, and who cared more about the game versus the commercials. That’s better data than Nielsen could ever get the old-fashioned way by paying people to take surveys and track just the show they watched and when. Microsoft knew how you felt at every moment, who you were with, and who paid attention to what.
That data is worth it’s weight in virtual gold, and the rebrand from Facebook to meta is less about virtual reality and more about explaining why all of its tech stack on the backend is analyzing all of our personal data. Just imagine what’s on your permanent Facebook record on the backend hidden from public view, even your own. If ever the government (which knows a thing or two about invasive privacy violating software) should ask Meta why it’s hard that data, it can simply go on a tangent about merging real and virtual worlds.
Oculus is a great platform, but Horizon Worlds and Horizon Workspaces are pathetic when respectively compared to Minecraft and a Zoom meeting. Nobody will ever take a meeting in VR, and you’re lying to yourself if you think that’s ever going to happen. An immersive meeting you’re not even paying attention to is never going to fly – there is too much friction, and no real business has time for that nonsense.
But make no mistake; the VR segment netted $2.2 billion in 2021 revenue versus $115.7 billion in its advertising. It isn’t nothing, but I can assure you that Meta is more focused on the bigger number.
Footnotes[1] Facebook to Acquire Oculus | Meta[2] VR headset unit sales worldwide 2024 | Statista[3] Building the Metaverse Responsibly | Meta[4] Meta’s Oculus Quest 2 has shipped 10 million units, according to Qualcomm[5] Foursquare predicts with foot traffic[6] For banks, data on your spending habits could be a gold mine[7] How Xbox Kinect adds a new dimension to marketing[8] Meta Reports Fourth Quarter and Full Year 2021 Results